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Court of Appeal of England and Wales provides guidance on approaching applications for stay of infringement proceedings

The Court of Appeal has upheld two decisions from the Board of Appeal of the Office of Harmonization for the Internal Market (OHIM) (Starbucks (UK) Ltd v British Sky Broadcasting Group plc and others; EMI (IP) Ltd and others v British Sky Broadcasting Group plc and another [2012] EWCA Civ 1201), concerning applications for stay of Community trade mark (CTM) infringement proceedings and parallel invalidity actions before OHIM. This provides guidance on the approach a CTM court should take when facing an application for stay of proceedings under Article 104(1) of CTM Regulation 207/2009/EC (CTMR).

BACKGROUND

The judgment concerned appeals in two sets of trade mark infringement proceedings against Sky, prompted by the announcement that Sky intended to launch a new internet television service under the name NOW TV. Sky applied for a stay in both proceedings under Article 104(1) CTMR, pending the outcome of its applications to OHIM to invalidate prior NOW marks owned and relied upon by EMI and Starbucks respectively.

Article 104(1) CTMR provides that a CTM court hearing an infringement action shall, unless there are special grounds for continuing the hearing, stay the proceedings where the validity of the CTM is already in issue before another CTM court or where a declaration of invalidity has already been filed at OHIM.

EMI Proceedings

Baldwin QC granted a stay, finding no special grounds. Rejecting EMI’s application for an interim injunction and speedy trial, he noted that the discrepancy between the unquantifiable damage suffered by both parties was key. Sky had planned to launch its new service before the commencement of the Olympics in July 2012. If the injunction was granted, the preferred name —NOW TV—would have been lost to Sky forever. EMI had been considering the launch of a NOW-branded music channel for many years, but not made any definite plans. Baldwin QC held that none of the factors relied upon by EMI constituted special grounds, finding that Sky’s invalidity application was an expected response to infringement proceedings. It was of little relevance that Sky had not obtained clearance prior to launch, despite being aware of EMI’s prior NOW mark. The fact that EMI’s claim for passing-off would proceed in the English courts was also irrelevant, particularly because it was not included in EMI’s application for interim relief. Overall, the need for commercial certainty in this case was no greater than usual.

Starbucks Proceedings

Arnold J refused a stay and ordered an expedited trial finding special grounds, noting that the invalidity proceedings before OHIM were likely to be protracted and the infringement proceedings involved a passing-off claim that the English court could hear. Arnold J also granted expedition of the infringement claim because Sky was due to launch its television service imminently and this would undermine Starbucks’ goodwill in the names NOW TV and NOW that it had allegedly acquired in relation to an internet television service and broadband services.

EMI appealed the decision of Baldwin QC and Sky appealed the decision of Arnold J. Etherton LJ dismissed both appeals.

DECISION

Etherton LJ said that there was little authority on the meaning of “special grounds” in Article 104(1) CTMR, drawing a number of conclusions from the legislation. The purpose of the provision was the avoidance of inconsistent decisions. The presumption in favour of a stay was strong. Special grounds only existed in rare and exceptional cases and had to relate to specific, factual circumstances. Systemic differences in rules of evidence, procedure and powers of case management between the courts of an EU Member State and OHIM, such as the fact that it took much longer for an application to OHIM to be determined than proceedings in an English court, were irrelevant. It was also irrelevant that an application to OHIM had been on a purely reactive basis to a threat of infringement proceedings.

Specific facts giving rise to a particular urgency could, depending on the precise circumstances, constitute special grounds. The general need of business to know where it stands was not sufficient. The urgency had to surmount the heavy presumption in favour of a stay, bearing in mind that protective and provisional measures may be available to protect claimants in the event of delay.

Starbucks Proceedings

Etherton J found that the reactive nature of Sky’s applications to OHIM and the existence of a passing-off claim were irrelevant, as these were commonly brought alongside infringement proceedings. Nonetheless, he found that Arnold J was entitled to conclude that there were exceptional circumstances of urgency, as Sky planned to launch its service imminently and this was not a case where Starbuck’s interests could be protected by an interim injunction.

EMI Proceedings

Etherton LJ said that Baldwin QC was correct to take a different view of the urgency from that taken by Arnold J in the Starbucks proceedings. EMI had shown no urgency in launching a NOWbranded music TV channel and still had no definite plans nor made any investment into such a channel. Further, EMI had agreed for Starbucks to use the NOW mark in relation to a TV service. Baldwin QC was entitled to conclude that EMI could be compensated adequately in damages for any loss.

COMMENT

The judgment provides guidance as to how a CTM court should approach an application for stay of infringement proceedings. The outcome of any such application will be fact-specific and the hurdle for qualifying as a special ground appears to be high.

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